Supreme Court puts brakes on oil PSU disinvestment

The Supreme Court on Tuesday put on hold the disinvestment of oil PSUs HPCL and BPCL, asking the government to obtain parliamentary approval for the sale of the government?s stake in the two companies. The government had gone ahead with the disinvestment process after Attorney-General Soli Sorabjee had advised it that there was no need to get parliamentary approval.

The Supreme Court on Tuesday put on hold the disinvestment of oil PSUs HPCL and BPCL, asking the government to obtain parliamentary approval for the sale of the government’s stake in the two companies.

The government had gone ahead with the disinvestment process after Attorney-General Soli Sorabjee had advised it that there was no need to get parliamentary approval.

A bench comprising Justices S. Rajendra Babu and G.P. Mathur ruled that the government’s stake in the oil companies could not be sold to private players without amending or repealing the laws under which they were created.

The bench accepted the argument of the petitioners — the Centre for Public Interest Litigation and the Oil Sector Officers’ Association — that the government could not bypass the Acts of Parliament that created HPCL and BPCL by executive fiat.

The bench said the provisions of the Esso (Acquisition of Undertaking in India) Act, 1974, and Burma Shell (Acquisition of Undertaking in India) Act, 1976, did not allow the transfer of their assets, wholly or partially, to another company. The shareholding pattern of these PSUs could be changed only by amending or repealing these laws, it added.

Referring to the Supreme Court’s ruling approving the government’s decision to privatise Balco, the bench said that that company was not created by an Act of Parliament, which placed it on a different footing.

The petitioners made it clear that they were not questioning the government’s disinvestment policy. They were merely arguing that since the two companies were created through Acts of Parliament, the Centre should get parliamentary approval for their sale.